Launched in 2023, PayPal USD (PYUSD) is a dollar-backed stablecoin issued by Paxos Trust Company, a US-regulated crypto custodian. As an Ethereum-compatible ERC-20 token, PYUSD competes in the stablecoin market alongside industry giants such as Tether (USDT) and Circle’s USD Coin (USDC). However, despite PayPal’s significant efforts to broaden PYUSD’s accessibility, the stablecoin remains far behind its more established counterparts.
PayPal has been actively working to enhance PYUSD’s usability, including initiatives like launching the stablecoin on the Solana blockchain in May. This move was supported by partnerships with major players like Crypto.com, Phantom, and Paxos, aimed at facilitating user onboarding onto the Solana network. Additionally, PayPal collaborated with Web3 infrastructure provider MoonPay to allow cryptocurrency purchases via PayPal accounts, further extending its reach into the crypto ecosystem.
Moreover, PayPal is incentivizing users to hold PYUSD by partnering with Anchorage Digital to offer a rewards program for clients who custody their stablecoins with the crypto custodian. Despite these initiatives, PYUSD still trails significantly in market capitalization when compared to USDT and USDC, which command nearly $118 billion and $35 billion, respectively, according to CoinMarketCap.
Dan Schulman, PayPal’s president and CEO, emphasized the importance of a stable digital currency in the evolving financial landscape, stating, “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar.” Despite this vision, PYUSD has yet to capture the market share needed to rival its leading competitors.
As PayPal continues to push for broader adoption and integration of PYUSD across various platforms and networks, it remains to be seen whether these efforts will be enough to close the gap with USDT and USDC, which continue to dominate the stablecoin market.